Presented below is information related to the Accounts Receivable accounts of Sw
ID: 2591238 • Letter: P
Question
Presented below is information related to the Accounts Receivable accounts of Swifty Inc. during the current year 2017.
1. An aging schedule of the accounts receivable as of December 31, 2017, is as follows.
Age
Net Debit Balance
% to Be Applied after
Correction Is Made
*The $3,000 write-off of receivables is related to the 91-to-120 day category
2. The Accounts Receivable control account has a debit balance of $368,200 on December 31, 2017.
3. Two entries were made in the Bad Debt Expense account during the year: (1) a debit on December 31 for the amount credited to Allowance for Doubtful Accounts, and (2) a credit for $3,000 on November 3, 2017, and a debit to Allowance for Doubtful Accounts because of a bankruptcy.
4. Allowance for Doubtful Accounts is as follows for 2017.
Allowance for Doubtful Accounts
5. A credit balance exists in the Accounts Receivable (60–90 days) of $4,600, which represents an advance on a sales contract.
Assuming that the books have not been closed for 2017, make the necessary correcting entries. (Round answers to 0 decimal places, e.g. 5,275. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.)
Date
Account Titles and Explanation
Debit
Credit
(To correct bad debt expense and write off accounts receivable)
(To reclassify credit balance in accounts receivable)
(To write off uncollectible accounts)
(To reduce allowance for doubtful account balance)
Age
Net Debit Balance
% to Be Applied after
Correction Is Made
estimated remainder uncollectible is 27% $368,200
Explanation / Answer
Necessary correcting entries are as prepared below:
Working:
Date Particulars L.F Amount ($) Amount ($) Dec-31 Bad Debt Expense 3,000 Account Receivable 3,000 (for correct bad debt expense and write off account receivable) Dec-31 Account Receivable 4,600 Advance on Sales contract 4,600 (For reclassify credit balance in account receivable) Dec-31 Allowance for doubtful accounts 3,400 Account Receivable 3,400 (For write off account receivable) Dec-31 Allowance for doubtful accounts 8,929 Bad debt expense 8,929 (for allowance reduced)